KARACHI: A Chinese company has acquired 12.7% shares in Masood Textile Mills in a privately negotiated deal, members of the Karachi Stock Exchange (KSE) learned on Friday.
Zhejiang Xinao Industry, Tongxiang City, has bought 7.6 million shares of Masood Textile Mills, according to the company’s stock filing.
The deal follows a similar privately negotiated deal carried out in December last year when another Chinese company, Shanghai Challenge Textile, acquired 24.3% shares in Masood Textile Mills.
Shanghai Challenge Textile bought 14.6 million shares of Masood Textile Mills on December 15, which constituted roughly one-fourth of the total shareholding of the Faisalabad-based company. The company’s free float - shares that are readily available for trading on the stock market - currently consists of 10.1 million shares or 16.9% of the company’s total outstanding shareholding.
The share price of Masood Textile Mills dropped 0.34% to Rs146.5 on Friday.
Masood Textile Mills was in talks last year with another Chinese group- Shandong Ruyi Science and Technology Group along with Shahid Nazir Ahmad and Nazia Nazir - for the sale of its majority shareholding. It had received the approval from the Competition Commission of Pakistan (CCP) along with a separate approval from the Ministry of Commerce of China to go ahead with the acquisition.
But the deal fell apart on September 30 when potential acquirers withdrew the public announcement of their intention to acquire up to 52% shares of Masood Textile Mills for undisclosed reasons.
It is the first-of-its-kind deal in Pakistan in which two Chinese companies have acquired stakes in a listed Pakistani textile company. Besides the duty-free access to the European Union under the GSP Plus status, the Chinese investors will have the advantage of better cotton prices and cost-effective labour by investing in a Pakistani company.
Masood Textile Mills is a vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities.
It posted a net tax profit of Rs195.2 million in January-March, which was 52.2% higher than its earnings in the same quarter of the preceding year. It produces value-added textile products, whose exports to the European Union (EU) are expected to increase due to the GSP Plus status that Pakistan has received.
Published in The Express Tribune, July 11th, 2015.
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